Nowhere to Hide from Inflation

"Well, as far as I can tell, diving back into my dark little cubbyhole
in renewed fear, the economy is already in shambles because of inflation
in consumer prices, and my marriage, my life and my career are in shambles
because everybody hates me and is out to get me, and that is why I seem to
be broke all the damned time."

It is inflation that makes me crazy until I am crying like a baby in fear
and locking myself in the closet under the stairs where I whimper piteously.
Through the door I can hear my wife and kids saying, "Come out! It's not so
bad! It's worse in China!"

Naturally, I yell at them to go away or I'll come out there and kill them
all, which makes them slide under the door Doug Noland's Credit Bubble Bulletin
at Prudentbear.com, where he references an outfit called China Knowledge, who
report that "Prices of major agricultural products in China rose 22.9% year-on-year
in the first six months of 2008, the National Bureau of Statistics (NBS) of
China announced. During the period, producer prices of plantation products,
forestry, animal husbandry and fishing products increased 13.8%, 12.1%, 39.8%
and 12.8% respectively."

Feeling a little better in a relative way, I was reaching for the doorknob
when I saw that thepracticalinvestor.com took a look at the latest report of
durable goods orders, and they noted that "Durable goods orders rose higher
than expected. Between the lines, however, inventories of consumer goods rose
2.3% while 94% of the 1.6% rise in durable goods orders were to support the
war effort. Without Iraq, the economy would be in shambles."

Well, as far as I can tell, diving back into my dark little cubbyhole in renewed
fear, the economy is already in shambles because of inflation in consumer prices,
and my marriage, my life and my career are in shambles because everybody hates
me and is out to get me, and that is why I seem to be broke all the damned
time.

And it doesn't help that Bill Bonner here at The
Daily Reckoning reminds me that I am not the center of the universe like
I think I am, and that "wages in the United States have not gone up in a
very long time. The latest figures on the subject show no real increase since
1968. Since then, every penny of hourly pay increase has been matched by
a cent of consumer price inflation."

Well, to tell you the truth, as bad as "being at a standstill" may seem to
workers, the biggest impact of inflation in prices is felt by those who do
not have jobs, which means that they do not have wages or an income with which
to keep up with inflation in prices. In fact, they have no wages or income
at all! And they pay the full cost of deprivation-by-increasing-prices, as
they had no income and no buying power when the price was lower, and now everything
is even farther out of reach!

And when I am down-and-out, everybody says, "Well, why don't you get a job,
you worthless bum?" and I calmly explain, "Go to hell! Like I am soOOOOooo
stupid that I never thought of that, ya moron!"

But apparently, Mr. Bonner does not hang out with us unemployed and unemployable
types (the "undeserving poor" as so eloquently defined by Alfred Doolittle,
Liza's father in My Fair Lady), probably because some of us are, like me, just
lazy, worthless mental defectives who view work as a punishment, and we prefer
everyone to just give us stuff and wait on us hand and foot by bringing stuff
to us, for which we are grateful for awhile until it becomes insufficient to
assuage our greedy, self-absorbed natures, and then we want more. More and
more. Always more!

Again ignoring me and my peculiar grubby ilk here in the fetid dregs of society,
he goes on with that "we ain't ahead by a lousy dime" line of thought when
he says, "Only the rich made out well, we were told. They owned assets. And
asset prices have soared. But if you quote stock prices...or housing prices...in
terms of the number of gallons of gasoline they will buy, you find that even
'the rich' aren't as rich as they think they are. The Dow would get you about
2,200 gallons of gas in 1968. Today, at $4.10 a gallon, the Dow is equal to
about 2,200 gallons."

So what to do? Easy one: Buy
gold! And it appears that a lot of people are doing that very thing,
as the independent.co.uk site reports that Britons may be getting smart,
too, as, "Britons who still have any wealth to invest are turning their backs
on the property portfolios, stocks and shares, and sports cars that have
long constituted conventional investments, and pumping their savings into
old-fashioned gold bullion and coins."

How smart? Well, they say that "Last year saw an 81 per cent increase in UK
investment in gold coins", and now, "Leading gold bullion suppliers BullionVault,
ATS Bullion and Baird & Co have all revealed record levels of investment
in gold bars, and the World Gold Council (WGC) has reported a big increase
in the number of gold coins being bought."

So this begs the question, "If the increase in buying was 81%, at what point
is it a bull market?", which in turn begs the question, "If I buy gold right
now, using every damned dime I can get my grubby little hands on, how freaking
much money will I make when gold and silver zoom, and will it be enough to
just disappear and start life over someplace far, far away?" Hahaha! Whee!

Richard Daughty (Mogambo Guru) is general partner and COO
for Smith Consultant Group, serving the financial and medical communities,
and the writer/publisher of the Mogambo Guru economic newsletter, an avocational
exercise to better heap disrespect on those who desperately deserve it. The
Mogambo Guru is quoted frequently in Barron's, The Daily Reckoning, and other
fine publications.